Statement of Cash Flows—Direct Method The comparative balance sheet of Canace Products Inc. for December 31, 20Y6 and 20Y5, is as follows: Dec. 31, 20Y6 Dec. 31, 20Y5 Assets Cash $234,050 $216,220 Accounts receivable (net) 84,790 77,660 Inventories 239,340 229,910 Investments 0 89,080 Land 122,770 0 Equipment 264,080 203,280 Accumulated depreciation-equipment (61,820) (54,820) Total assets $883,210 $761,330 Liabilities and Stockholders' Equity Accounts payable $159,860 $149,980 Accrued expenses payable 15,900 19,790 Dividends payable 8,830 6,850 Common stock, $10 par 47,690 37,310 Excess of paid-in capital over par 179,290 103,540 Retained earnings 471,640 443,860 Total liabilities and stockholders’ equity $883,210 $761,330 The income statement for the year ended December 31, 20Y6, is as follows: Sales $1,406,850 Cost of merchandise sold 579,300 Gross profit $827,550 Operating expenses: Depreciation $7,000 Other operating expenses 730,500 Total operating expenses 737,500 Operating income $90,050 Other expense: Loss on sale of investments (24,050) Income before income tax $66,000 Income tax expense 21,120 Net income $44,880 Additional data obtained from an examination of the accounts in the ledger for 20Y6 are as follows: Equipment and land were acquired for cash. There were no disposals of equipment during the year. The investments were sold for $65,030 cash. The common stock was issued for cash. There was a $17,100 debit to Retained Earnings for cash dividends declared. Required: Prepare a statement of cash flows, using the direct method of presenting cash flows from (used for) operating activities. Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments. Canace Products Inc.Statement of Cash FlowsFor the Year Ended December 31, 20Y6 Cash flows from (used for) operating activities: $- Select - - Select - - Select - - Select - Net cash flows from operating activities $fill in the blank 9 Cash flows from (used for) investing activities: $- Select - - Select - - Select - Net cash flows used for investing activities fill in the blank 16 Cash flows from (used for) financing activities: $- Select - - Select - Net cash flows from financing activities fill in the blank 21 $- Select - Cash balance, January 1, 20Y6 fill in the blank 24 Cash balance, December 31, 20Y6 $fill in the blank 25

Statement of Cash Flows—Direct Method The comparative balance sheet of Canace Products Inc. for December 31, 20Y6 and 20Y5, is as follows: Dec. 31, 20Y6 Dec. 31, 20Y5 Assets Cash $234,050 $216,220 Accounts receivable (net) 84,790 77,660 Inventories 239,340 229,910 Investments 0 89,080 Land 122,770 0 Equipment 264,080 203,280 Accumulated depreciation-equipment (61,820) (54,820) Total assets $883,210 $761,330 Liabilities and Stockholders' Equity Accounts payable $159,860 $149,980 Accrued expenses payable 15,900 19,790 Dividends payable 8,830 6,850 Common stock, $10 par 47,690 37,310 Excess of paid-in capital over par 179,290 103,540 Retained earnings 471,640 443,860 Total liabilities and stockholders’ equity $883,210 $761,330 The income statement for the year ended December 31, 20Y6, is as follows: Sales $1,406,850 Cost of merchandise sold 579,300 Gross profit $827,550 Operating expenses: Depreciation $7,000 Other operating expenses 730,500 Total operating expenses 737,500 Operating income $90,050 Other expense: Loss on sale of investments (24,050) Income before income tax $66,000 Income tax expense 21,120 Net income $44,880 Additional data obtained from an examination of the accounts in the ledger for 20Y6 are as follows: Equipment and land were acquired for cash. There were no disposals of equipment during the year. The investments were sold for $65,030 cash. The common stock was issued for cash. There was a $17,100 debit to Retained Earnings for cash dividends declared. Required: Prepare a statement of cash flows, using the direct method of presenting cash flows from (used for) operating activities. Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments. Canace Products Inc.Statement of Cash FlowsFor the Year Ended December 31, 20Y6 Cash flows from (used for) operating activities: $- Select - - Select - - Select - - Select - Net cash flows from operating activities $fill in the blank 9 Cash flows from (used for) investing activities: $- Select - - Select - - Select - Net cash flows used for investing activities fill in the blank 16 Cash flows from (used for) financing activities: $- Select - - Select - Net cash flows from financing activities fill in the blank 21 $- Select - Cash balance, January 1, 20Y6 fill in the blank 24 Cash balance, December 31, 20Y6 $fill in the blank 25

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Statement of Cash Flows—Direct Method

The comparative balance sheet of Canace Products Inc. for December 31, 20Y6 and 20Y5, is as follows:

	Dec. 31, 20Y6	Dec. 31, 20Y5
Assets
Cash	$234,050		$216,220
Accounts receivable (net)	84,790		77,660
Inventories	239,340		229,910
Investments	0		89,080
Land	122,770		0
Equipment	264,080		203,280
Accumulated depreciation-equipment	(61,820)		(54,820)
	Total assets	$883,210		$761,330

Liabilities and Stockholders' Equity
Accounts payable	$159,860		$149,980
Accrued expenses payable	15,900		19,790
Dividends payable	8,830		6,850
Common stock, $10 par	47,690		37,310
Excess of paid-in capital over par	179,290		103,540
Retained earnings	471,640		443,860
	Total liabilities and stockholders’ equity	$883,210		$761,330

The income statement for the year ended December 31, 20Y6, is as follows:

Sales			$1,406,850
Cost of merchandise sold			579,300
Gross profit			$827,550
Operating expenses:
	Depreciation	$7,000
	Other operating expenses	730,500
		Total operating expenses		737,500
Operating income			$90,050
Other expense:
		Loss on sale of investments		(24,050)
Income before income tax			$66,000
Income tax expense			21,120
Net income			$44,880

Additional data obtained from an examination of the accounts in the ledger for 20Y6 are as follows:

Equipment and land were acquired for cash.
There were no disposals of equipment during the year.
The investments were sold for $65,030 cash.
The common stock was issued for cash.
There was a $17,100 debit to Retained Earnings for cash dividends declared.

Required:

Prepare a statement of cash flows, using the direct method of presenting cash flows from (used for) operating activities. Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments.

Canace Products Inc.Statement of Cash FlowsFor the Year Ended December 31, 20Y6

Cash flows from (used for) operating activities:
	$- Select -
	- Select -
	- Select -
	- Select -
Net cash flows from operating activities		$fill in the blank 9
Cash flows from (used for) investing activities:
	$- Select -
	- Select -
	- Select -
Net cash flows used for investing activities		fill in the blank 16
Cash flows from (used for) financing activities:
	$- Select -
	- Select -
Net cash flows from financing activities		fill in the blank 21
		$- Select -
Cash balance, January 1, 20Y6		fill in the blank 24
Cash balance, December 31, 20Y6		$fill in the blank 25

Expert Solution

Explanation -

Cash Flow Statement -

Cash Flow Statement is the statement that shows the cash inflow and outflow of the company. This is very important financial statement that shows the actual cash position of the company.

On the basis of cash flow from operating activities company decides whether to purchase fixed assets or repay debt, pay dividend if they have positive cash flow from operating activity.

Or else they can sell the assets or borrow funds by way of notes to increase the negative or low cash flow available in the business.

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